For their victims, the phone call sounded like salvation. Seniors, living on a fixed income and having trouble with the bills, they were glad to hear someone offering them a reverse mortgage that would allow them to turn the equity in their house into cash. But the four mortgage professionals charged with perpetrating a $2.5 million reverse mortgage fraud scheme are anything but angels. Their aftermath has left those who signed up with them impoverished and close to foreclosure.
The Miami Herald reports that the way it allegedly worked is that the mortgage professionals would call up the seniors – they only called seniors – and pitch them a reverse mortgage insured as an FHA loan. After they agreed and filled out the paperwork, the four conspired to have the homes appraised at many multiples of their value. In one case, a $31,000 condo got a value of $275,000. They then got the inflated reverse mortgage approved and staged a fictitious short sale, diverting the difference between the reverse mortgage amount and the short sale into their personal accounts, without ever paying off the existing mortgage. Falsified documents were used to hide the scheme from the lender and from the government.
If convicted, the quartet faces a max sentence of 30 years each and fines up to $1 million.
“These are seniors who are on Medicare, limited incomes, desperate for help,” Tony West, U.S. assistant attorney general for the Civil Division told the Miami Herald. “Money that should’ve gone to help seniors with modest incomes instead went to line the pockets of fraudsters.”
One of the signs of a scam is that they contacted you. Always be wary when someone calls up with a great “opportunity.”
Reverse mortgage scam targeted seniors [Miami Herald] (Thanks to Shawna!)